Mr. James Mackay, Junr., to the Hon. the Colonial Secretary.

Sir,—

I have the honor to inform you that, in accordance with the instructions conveyed in Mr. Bell's Memorandum of the 22nd February, 1863, I have effected an exchange of Native Reserves sections 139, 140, and 141, at Motueka, for section 9. Motupipi, with a view to the latter being given up to the Natives of that place, in compensation for the non-fulfilment of the arrangements formerly entered into between them and Mr. Ligar, relative to Native Reserves there.

I do myself the honor to forward herewith the deed of exchange of the laud in question, for the purpose of His Excellency's consent being indorsed thereon, in accordance with the seventh section of "The Native Reserves Act, 1856."

It was also arranged by Mr. Bell, and personally promised by him to the Natives when at Auckland, that sections 5 and 6, Motupipi, containing 265 acres, and formerly included in Mr. Ligar's award to the Natives, and section 160, containing 158 acres, reserved by Mr. McLean for Rawiri Watino and his people, the whole of which has been improperly granted to the Governors of Nelson College, should be given up for the use of the Motupipi Natives; and I was instructed to arrange between the College Governors and His Honor the Superintendent for the land being exchanged for some elsewhere.

On applying to the College Governors they expressed a willingness to surrender the land and take other land in exchange for it. The Superintendent also agreed to assist the Governors in the matter. In attempting to carry out the proposition, it was discovered that the College Governors could not dispose of the land. In order to overcome the former difficulty, an Act was passed in the last Session of the General Assembly to enable the Governors of Nelson College to sell or exchange lands held in trust by them.

It is now proposed to buy the interests of the College Governors in sections 5, 6, and 160 at Motupipi, and that they should invest the money in the purchase of land elsewhere.

The Superintendent of Nelson lately placed a sum of money on the Estimates to enable him to purchase certain lands from the College Governors, but the Provincial Council have refused to sanction the expenditure. There is therefore no probability of the question being arranged by the Provincial Government, and it will now be necessary for the General Government to purchase 423 acres of land from the College Governors, in order to keep faith with the Natives. The land in question is worth about £2 per acre.